CBT CORPORATION
333 Broadway
Paducah, KY 42002
March 18, 1994
Dear Stockholder:
On behalf of the Board of Directors and management of CBT
Corporation, I would like to invite you to the Annual
Meeting of Stockholders, to be held on Tuesday, April 19,
1994, at 2:00 P.M., local time, AT THE MAIN OFFICE OF
CITIZENS BANK AND TRUST COMPANY, 333 BROADWAY, PADUCAH,
KENTUCKY.
The notice of the meeting, proxy statement, and proxy, as
well as the Annual Report to shareholders for the year ended
December 31, 1993, are enclosed. We urge you to review
these materials carefully in order that you may be fully
informed about the proposals that will be presented for your
consideration at the meeting.
We hope that you will be able to attend this meeting in
person, but in any event it is important that your shares be
voted at the meeting in accordance with your preference.
Please complete and sign the proxy and return it in the
enclosed envelope at your earliest convenience. If you do
find it possible to attend the meeting and wish to vote in
person, you may withdraw your proxy at that time.
Sincerely,
William J. Jones
President and Chief Executive Officer
CBT CORPORATION
333 BROADWAY
PADUCAH, KENTUCKY 42002
MARCH 18, 1994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
The Annual Meeting of Stockholders of CBT Corporation will
be held on TUESDAY, APRIL 19, 1994, AT 2:00 P.M. AT THE MAIN
OFFICE OF CITIZENS BANK AND TRUST COMPANY, 333 BROADWAY,
PADUCAH, KENTUCKY, for the following purposes:
1) To elect a Board of Directors consisting of thirteen
(13) directors to serve for the ensuing year.
2) To amend Article VI of the Corporation's Articles of
Incorporation to authorize 12,000,000 shares of Common
Stock having no par value.
3) To consider and act upon such other matters as may
properly come before the meeting or any adjournment thereof.
Stockholders of record at the close of business on March 10,
1994 are entitled to vote at the meeting. Information
regarding the matters to be acted upon at the Annual Meeting
is contained in the Proxy Statement accompanying this
notice.
By Order of the Board of Directors
William J. Jones
President and Chief Executive Officer
IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY. IN ORDER TO
ASSURE THE ESTABLISHMENT OF A QUORUM AT THE MEETING, YOU ARE
URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED.
CBT CORPORATION
333 Broadway
Paducah, Kentucky 42002
March 18, 1994
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of CBT Corporation
(Corporation) of proxies to be voted at the Annual Meeting
of Stockholders of the Corporation to be held at 2:00 p.m.
Paducah time at the main office of Citizens Bank and Trust
Company, 333 Broadway, Paducah, Kentucky, on Tuesday, April
19, 1994, and at any and all adjournments of such meeting.
Any stockholder giving a proxy has the right to revoke it by
a written notice delivered to the Secretary of the
Corporation, P.O. Box 2400, Paducah, Kentucky, 42002-2400,
or in person at the meeting, prior to the time the presence
of a quorum has been determined and declared. All proxies
will be voted in accordance with the directions of the
stockholder and to the extent no directions are given, will
be voted "for" the nominees for directors and "for" Proposal
II.
The approximate date on which this Proxy Statement and
form of proxy for the 1994 Annual Meeting of Stockholders
are first being given to stockholders is March 18, 1994.
The Corporation will bear the entire cost of soliciting
proxies. Solicitation will be primarily by mail. Certain
officers of the Corporation and its subsidiaries may solicit
proxies personally or by telephone or telegraph, but such
persons will not be specially compensated for such services.
OUTSTANDING VOTING SECURITIES
Only stockholders of record at the close of business on
March 10, 1994 are entitled to notice of, and to vote at,
the Annual Meeting. As of March 10, 1994, there were issued
and outstanding 2,767,519 shares of common stock. The
Corporation has no class of stock other than common stock.
Each share of the common stock is entitled to one vote on
all matters presented to the stockholders with the exception
of the election of directors. In the election of directors,
cumulative voting rules apply. Under cumulative voting,
each stockholder is entitled to cast as many votes in the
aggregate as shall equal the number of shares of the common
stock owned by him or her multiplied by the number of
directors to be elected. Each stockholder, or his or her
proxy, may cast all of his or her votes (as thus determined)
for a single nominee for director or may distribute them
among two or more nominees, in the stockholder's discretion.
As to the authority of the persons named as proxies in the
accompanying proxy card to cumulate votes, see the section
entitled "Election of Directors".
As of March 10, 1994, the Trust Department of Citizens
Bank and Trust Company (Bank) held of record 483,288 shares
of the Corporation's common stock in a fiduciary capacity
representing approximately 17.5% of the Corporation's
outstanding shares of common stock. With respect to 299,600
shares (approximately 10.8% ), the instrument creating the
trust or fiduciary relationship specifically directs the
Bank to vote the shares and the shares will be voted "for"
the proposals presented for consideration. The remaining
shares held by the Trust Department of the Bank will be
voted at the direction of the beneficial owners.
As of March 10, 1994, to the knowledge of the Corporation,
there were no other record or beneficial owners of more than
5% of the Corporation's issued and outstanding common stock.
PROPOSAL I
ELECTION OF DIRECTORS
Among items to be acted upon at the Annual Meeting of
Stockholders is the election of thirteen (13) directors to
the Board of Directors of the Corporation. Each of the
persons elected will serve a term in office of one (1) year
and until their successors are duly elected.
The following table contains certain information as of
March 10, 1994 about each director, director nominee and
named officer, as hereafter defined, of the Corporation and
directors, director nominees and named officers as a group.
Mr. Rhodes, currently a director of the Corporation and
Bank, is retiring and will not be a nominee for re-election.
Mr. Johnson, currently a director of the Corporation and
Bank, will not be a nominee for re-election due to a
realignment of the Corporation's Board of Directors. Mr.
Johnson will remain a director of the Bank. Unless
otherwise indicated, the named person has sole voting and
investment powers with respect to the reported shares.
Where the holdings of a family member are noted as being
held "individually," the family member has sole voting and
investment power with respect to the shares. Where joint
ownership is noted, the joint owners share voting and
investment power as to the shares.
Shares of Common Stock
Beneficially Owned as of
Corporation March 10, 1994
Director Principal
Name Age Since Occupation Number %
Irving P. Bright Jr.<1> 61 1983 Chairman of the Board, 33,399 1.2%
Bright's
(Clothing Retailer)
John Burman <2> 60 1993 Agency Manager, KY 23,738 **
Farm Bureau
Patrick J. Cvengros <3><4><15> 58 1983 Retired President and 43,580 1.6%
Chief Executive Officer
of Corporation Bank;
Director, Computer
Services, Inc.
William H. Dyer <5> 58 1991 President, Tennessee
Valley Towing (River Barge)
Louis A. Haas <6> 52 1991 Investor 85,111 3.1%
F. Donald Higdon 62 1991 General Manager, 803 **
Kraft Food Service
M. Leon Johnson <3><7> 53 1984 President, 29,470 1.1%
Fidelity Credit
Corporation
William J. Jones <3><8><15> 38 1991 President and Chief 15,866 **
Executive Officer
of the Corporation
and Bank
Louis M. Michelson <9> 49 1991 President, Michelson 2,596 **
Jewelers, Inc.
C. Thomas Murrell, III <15><16> 50 * Senior VP Commercial 1,048 **
and Consumer Banking,
Bank
Louis D. Myre, MD <10> 67 1983 Physician 17,226 **
J. Russell Ogden, III <15><16> 46 * Senior VP Trust and 14,554 **
Investments, Bank
David M. Paxton <11> 37 1991 Chief Financial 1,650 **
Officer, Paducah
Newspapers, Inc.
Robert P. Petter <12> 58 1983 President, Henry A. 16,314 **
Petter Supply Company
(Industrial Supply
Wholesaler)
Joseph A. Powell <13> 61 1991 General Manager, 10,888 **
Old Hickory Clay
Company
Allan R. Rhodes <3><14> 70 1983 Chairman, Allan 43,011 1.6%
Rhodes, Inc.
(Automobile Dealer);
Director Owensboro
National Bank
William A. Usher 64 1991 Chairman and Chief 4,000 **
Executive Officer,
Usher Transportation
Inc. (Trucking)
All directors and named executive officers of the
Corporation and its subsidiaries as a group (21 persons). 385,014 13.9%
*These individuals are executive officers of the Bank and
are not directors of the Corporation or Bank.
**Represents less than 1.0% of total outstanding shares.
[FN]
<1> Includes 2,966 shares owned individually by
Mr. Bright's wife and 6,000 shares in a trust for
which she serves as Trustee and 3,691 shares over which he
disclaims beneficial ownership held in the name of
First Investors of Paducah.
<2> Includes 11,125 shares individually owned by
John Burman's wife.
<3> These individuals are also directors of
Fidelity Credit Corporation.
<4> Includes 16,338 shares owned jointly by Mr.
Cvengros and his wife.
<5> Includes 3,891 shares over which he disclaims
beneficial ownership held in the name of First Investors
of Paducah.
<6> Includes 2,952 shares held in custodian
accounts for Mr. Haas' children and 3,943 shares owned
jointly by he and his wife.
<7> Includes 700 shares held in the names of Mr.
Johnson's children in which he claims no beneficial
interest and 3,896 shares held by the Corporation's
Retirement, Savings and Profit Sharing Plan.
<8> Includes 1,110 vested shares held by the
Corporation's Retirement, Savings and Profit Sharing Plan.
<9> Includes 798 shares owned by Michelson Jewelers, Inc.
<10> Includes 7,656 shares owned individually by
Dr. Myre's wife and 2,070 shares in a trust for which she
serves as a Trustee.
<11> Includes 1,600 shares owned jointly by Mr. Paxton and his wife.
<12> Includes 4,104 shares held in agency accounts
established for Mr. Petter's son and daughter.
<13> Includes 1,719 shares owned individually by Mr. Powell's wife.
<14> Includes 27,000 shares owned by Allan Rhodes,
Inc., 750 shares in a trust for which
he serves as Trustee, 3,691 shares over which he
disclaims beneficial ownership held
in the name of First Investors of Paducah, and 5,184
shares in a trust for which
Mr. Rhodes' wife serves as Trustee.
<15> Includes shares which, as of March 10, 1994,
were subject to options under the
Corporation's Incentive Stock Option Plan entitling the
holders to acquire the shares
subject thereto within the next 60 days. As of March 10,
1994, Mr. Cvengros, Mr.
Jones, Mr. Ogden and the executive officers as a group
held such options for the
purchase of 24,000, 11,250, 8,750, and 56,000 shares,
respectively. Such options
have been included in the calculation of the percentage
of shares outstanding owned
by Mr. Cvengros, Mr. Jones, Mr. Ogden and the executive
officers as a group.
<16> Includes 118 vested shares for Mr. Murrell
and 2,843 vested shares for Mr. Ogden
held by the Corporation's Retirement, Savings and Profit
Sharing Plan.
The Board of Directors has no reason to believe that any
of the nominees will be unavailable to serve as director.
If any nominee should become unavailable before the Annual
Meeting, the persons named in the enclosed proxy card, or
their substitutes, or a majority of them, reserve the right
to vote for a substitute nominee selected by the Board of
Directors. In addition, if any stockholder or stockholders
shall vote shares cumulatively or otherwise for the election
of a director or directors other than the nominees named
above, or substitute nominees, or for less than all of them,
the persons named in the enclosed proxy card, or their
substitutes, or a majority of them, reserve the right to
vote cumulatively for some number less than all of the
nominees named above or any substitute nominees, and for
such of the persons nominated as they may choose.
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's officers, directors and persons
who own more than ten percent (10%) of the Corporation's
Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulation to
furnish the Corporation with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms
received by it or representations from such persons that no
Form 5's were required, the Corporation believes that all
filing requirements applicable to its officers, directors
and greater than ten percent (10%) beneficial owners were
complied with in 1993.
PROPOSAL II
AMENDMENT TO ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
Article VI of the Articles of Incorporation presently
authorizes the issuance of 6,000,000 shares of Common Stock
having no par value. At the Annual Meeting, the
shareholders will be asked to approve the Board of
Directors' proposal that the Articles of Incorporation be
amended to increase the number of authorized shares of
Common Stock to 12,000,000. The proposed amendment would
amend Article VI to read in its entirety as follows:
The amount of authorized stock of the Corporation is
12,000,000.
The Corporation will not issue fractional shares,
but will handle any fraction of a share according
to the law of Kentucky.
Outstanding shares; Reasons for and Effect of the Proposed
Amendment
As of March 10, 1994, the Corporation had 2,767,519
shares of Common Stock issued and outstanding. The proposed
amendment will make available additional shares of Common
Stock for issuance by the Board of Directors from time to
time for corporate purposes, including stock splits, stock
dividends, acquisitions, future financing and employee
benefit plans.
The additional shares of Common Stock for which
authorization is sought would be identical to the shares of
Common Stock of the Corporation now authorized. The Board
of Directors of the Corporation has no present intent to
issue and no specific plan as to any specific use or uses of
additional shares of Common Stock, if authorized.
Although the Board of Directors is not aware of any
proposed attempt to acquire control of the Corporation (by,
for example, a tender or exchange offer, merger, or proxy
contest), the proposed amendment would create a substantial
number of shares of the Common Stock that could be utilized
in an effort to discourage any such attempt not approved by
the Board of Directors. The issuance of such shares could
have the effect of making the Corporation less attractive or
making the acquisition of control more expensive or
impracticable. Defensive uses of unissued shares by
incumbent managements in other instances have included,
among others, sales of shares to persons expected to be
supportive of management. Both the transactions in which
the shares are issued and their effect on an attempted
acquisition of control could be unfavorable to the interests
of shareholders. The Board of Directors of the Corporation
does not know of any person interested in acquiring control
of the Corporation and does not have any plans to use the
additional shares of Common Stock as a takeover defensive
measure.
VOTE REQUIRED
The adoption of this proposal will require the
affirmative vote of the holders of a majority of the
outstanding shares of Common Stock of the Corporation voted
at the Annual Meeting, assuming a quorum is present. Under
the Corporation's Articles of Incorporation and Bylaws and
the Kentucky Business Corporation act, abstentions are not
counted in determining the number of votes cast for and
against a proposal and, in effect, represent no action on
the proposal by the abstaining shareholder although they do
reduce the number of votes required to approve a proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" THIS PROPOSAL.
MEETINGS OF THE BOARD OF DIRECTORS AND
DIRECTORS' FEES
The Board of Directors of the Corporation held nine (9)
meetings during the fiscal year ended December 31, 1993.
Directors Johnson, Myre and Petter attended fewer than 75%
of the meetings. The Corporation does not pay any fees to
its Directors nor does it have any standing committees.
Compensation of non-management members of the Bank's Board
of Directors consists of an annual retainer of $3,000, plus
$75 for each committee or special meeting attended.
Compensation of all directors of FCC consists of a fee of
$200 for each meeting attended.
EXECUTIVE COMPENSATION
There is shown on the following page information
concerning the annual compensation for services in all
capacities to the Corporation and its subsidiaries for the
fiscal years ended December 31, 1993, 1992, and 1991, of
those persons who were, at December 31, 1993 (i) the Chief
Executive officer and (ii) the other four most highly
compensated executive officers of the Corporation or its
subsidiaries (the named officers).
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Securities Underlying
Name and Annual Compensation Options All other
Principal Position Year Salary Bonus(1) (#Shares) Compensation(2)
William J. Jones 1993 $ 165,000 $ 48,411 7,000 $ 20,788
President & Chief 1992 125,000 49,170 9,000 16,927
Executive Officer 1991 91,760 25,000 -- 9,410
Patrick J. Cvengros 1993 56,420 -- -- 194,836
Retired President & 1992 56,420 -- -- 188,203
Chief Executive 1991 156,260 46,878 -- 16,698
Officer
C Thomas Murrell,III 1993 105,000 17,965 3,250 10,920
Sr, VP Commercial & 1992 100,000 17,400 1,500 6,206
Consumer Banking, 1991 16,666 2,718 -- --
Bank
J Russell Ogden,III 1993 96,720 16,549 3,250 9,923
Sr. VP Trust and, 1992 93,000 16,182 4,500 9,968
Investments, Bank 1991 91,260 15,971 -- 9,350
M. Leon Johnson 1993 86,800 33,984 -- 11,088
President, Fidelity 1992 82,000 27,657 -- 12,308
Credit Corporation 1991 77,160 24,123 -- 7,729
(1) See the section entitled "INCENTIVE COMPENSATION PLANS".
(2) Includes (among others):
A. Company contributions to 401(K) and Money Purchase Retirement Plans
for Jones, Cvengros, Murrell, Ogden and Johnson in the amounts of
$ 18,588, $ 5,083,$ 10,920 ,$ 9,923 and $ 11,088, respectively,
for the year ended December 31, 1993.
B. Fidelity Credit Corporation director fees for Jones, Cvengros
and Johnson in the amounts of $ 2,200, $ 2,400 and $ 2,400,
respectively, for the year ended December 31, 1993.
C. Other compensation for Mr. Cvengros includes payments of
$ 87,353 and $100,000 under deferred compensation and salary
continuance agreements, respectively, for the year ended
December 31, 1993.
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is further information on grants of stock
options pursuant to the 1986 and 1993 Stock Option Plans
during the fiscal year ended December 31, 1993, to the Named
Officers which are reflected in the Summary Compensation
Table on Page 9.
Number of Potential Realizable Value
Securities Underlying % of Total Options Exercise or At Assumed Annual Rates
Options Granted to Employees Base Price Expiration of Stock Price Appreciation
Name Granted (1) In Fiscal Year 1993 Per Share Date For Option Term
5% 10%
William J. Jones 7,000 26.7% $ 29.00 01/03 $ 126,680 $ 323,540
Patrick J. Cvengros -- -- -- -- -- --
C. Thomas Murrell, III 3,250 12.4% 29.00 01/03 59,280 150,215
Russell Ogden, III 3,250 12.4% 29.00 01/03 59,280 150,215
M. Leon Johnson -- -- -- -- -- --
A total of 26,250 options were granted under the Plans to a total of (7)
officers of the Corporation or the Bank during 1993.
(1) Options are not exercisable during the first two
years after the date of the grant. Thereafter, options may
be exercised on or after the anniversary date of the grant
in three equal installments so that the full grant may be
exercised no sooner than four years after the date of the
grant.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Shown below is information with respect to the unexercised
options to purchase the Corporation's Common Stock granted
in fiscal year 1993 and prior years under the 1986 Stock
Option Plan to the Named Officers and held by them at
December 31, 1993.
Number of Securities
# Shares Acquired Value Underlying Unexercised Value of Unexercised
Name On Exercise Realized Options as of 12/31/93 In-The-Money Options
At Fiscal Year End
Exercisable Unexercisable Exercisable Unexercisable
William J. Jones -- -- 11,250 16,000 $ 231,863 $ 228,000
Patrick J. Cvengros -- -- 24,000 -- 485,040 --
C. Thomas Murrell, III -- -- -- 4,750 -- 46,265
J. Russell Ogden, III -- -- 8,750 7,750 172,288 111,755
M. Leon Johnson -- -- -- -- -- --
*Amounts shown represent difference in base price and market
value at December 31, 1993 of $38.00.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Corporation does not have a Compensation Committee of
the Board of Directors. However, all compensation matters,
including executive compensation, are decided by a
Compensation Committee of Citizens Bank and Trust Company
(the Bank). The following Directors served on the
Compensation Committee during 1993: Irving P. Bright, Jr.,
Patrick J. Cvengros, Louis A. Haas, William J. Jones, Louis
M. Michelson and Robert P. Petter. Directors Cvengros and
Jones were also executive officers of the Corporation during
1993. As evidenced by the Compensation Committee minutes,
neither of these individuals were present during the times
when their respective compensation packages were discussed.
Officers of the Corporation are not compensated by the
Corporation, except in the form of stock options granted
under the Corporation's Stock Option Plans. Instead,
officers of the Corporation are compensated by the Bank.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Bank's Board of
Directors has furnished the following report on executive
compensation:
The Compensation Committee's executive compensation
policies are designed to provide competitive levels of
compensation that integrate pay with the Corporation's
annual and long-term performance goals, reward corporate
performance, recognize individual's initiative and
achievements, and assist the Corporation in attracting and
retaining qualified executives. The Compensation Committee
also endorses the position that stock ownership by
management and stock-based performance compensation
arrangements are beneficial in aligning management's and
shareholder's interests in the enhancement of shareholder
value. Thus, the Committee has also increasingly utilized
these elements in the Corporation's compensation packages
for its executive officers.
Compensation paid the Corporation's executive officers in
1993, as reflected in the previous tables, consist of the
following elements: base salary, amounts earned under the
Corporation's Incentive Compensation Plan and the value of
stock options granted under the Corporation's stock option
plans, amounts earned under the Corporation's retirement
plans and amounts paid to Mr. Cvengros under deferred
compensation and salary continuance agreements.
Annual Base Salary
In 1992, the Bank contracted with a nationally recognized
consulting firm to perform a complete review of its salary
administration plan. The result of this firm's work was a
structured salary program based on a grading system for
every position, including the President and Chief Executive
Officer, in the Bank. Job grades were assigned based on the
duties and level of responsibility of the position. Each
grade was assigned a minimum, mid-point and maximum salary
point based on local, regional and national salary surveys.
Increases in annual salary are driven by a salary matrix
which takes into consideration, among other things, national
inflation rates. The amount of annual salary increase an
employee receives is supported by a formalized performance
evaluation process completed by the employee's direct
supervisor. In the case of the named executive officers,
the President and Chief Executive Officer completes the
evaluation. The Compensation Committee of the Bank's Board
of Directors completes the President and Chief Executive
Officer's evaluation.
In the latter part of the fiscal year, the Committee
reviews with the Chief Executive Officer an annual salary
plan for the Corporation's executive officers (other than
the Chief Executive Officer). This plan is based on
industry peer groups, national surveys and performance
judgments as to the past and expected future contributions
of the individual executives. In addition, the Committee
periodically is advised by independent compensation
consultants concerning salary competitiveness.
In judging the performance of the Chief Executive Officer,
the Committee principally focuses upon corporate
performance. Among the performance factors which the
Committee considers are profitability, capital levels and
performance relative to such industry standards as asset
quality, interest margin, overhead expense and asset growth.
The Committee also considers whether or not the overall
value of the Corporation has improved from year to year.
1993 was a year of growth for the Corporation with total
year-end assets increasing over 8% from 1992 as the Bank was
successful in acquiring the assets and assuming the
liabilities of a local competitor and the Corporation
completed its first acquisition of an out-of-market
commercial banking institution. In addition, the
Corporation announced in early 1994 plans to acquire a large
commercial bank holding company in Western Kentucky. The
Corporation had record income in 1993, earning shareholders
$2.86 per common share, up 4% over 1992, while the per share
book value of the Corporation's common stock increased
approximately 10%. At the same time the market value of the
Corporation's Common Stock increased 31%. The Corporation's
asset quality and capital levels also continued to improve
and were above peer group levels. The Chief Executive's
salary was subjectively determined based on the strong
financial performance of the Corporation in 1993 as well as
his relative salary structure in relation to peer.
Incentive Compensation Plan
The Bank maintains an Incentive Compensation Plan for
selected officers and employees. These officers and
employees are selected annually by the Bank's Board of
Directors.
Individual participant incentive awards are determined
based on a two-step process. The first step involves the
calculation of the Bank's actual performance with respect to
previously identified key performance measurement factors
and peer group target levels. These target levels are set
with the intent of moving the Bank into the top 25th
percentile of its national peer group over a period of time.
A corresponding percentage of base salary is earned for each
performance factor based on actual performance results in
relationship to a weighted tiered matrix. The performance
measurements and corresponding weightings, in parenthesis,
for 1993 consisted of nonperforming loans (10%), net charge-
offs (10%), net overhead expense (20%), net interest margin
(20%) and return on average stockholder's equity (40%).
Depending on position, the percentages of base salary
varies. Named officers and the Chief Executive Officer have
maximum percentages of 25% and 43%, respectively. This
calculation determines the maximum incentive compensation
available to each executive. Once this amount is
determined, individual payouts, excluding the President and
Chief Executive Officer, are determined based on the
percentage completion of quantitative and qualitative
performance measurements set out at the beginning of the
year. In determining the Chief Executive Officer's award,
the Committee considers its evaluation of the Corporation's
overall performance in different areas as well as in
relationship to the performance of the Corporation's peers.
These results were discussed under the caption "Annual Base
Salary" contained in this report.
Stock Options
The CBT Corporation 1986 and 1993 Stock Option Plans
(Plans) provides for two (2) types of options. Both plans
provide a type of option which constitutes an "incentive
stock option" as contemplated and defined in Section 422A of
the Internal Revenue Code of 1986, as amended ("the Code").
The 1986 Stock Option Plan provides a second type, the
Regular Stock Option, which does not constitute an
"incentive stock option" under Section 422A of the Code. A
Plan Committee, comprised of all disinterested members of
the Board, has sole authority to designate recipients of
options under the Plans from those officers and employees
who, in its opinion, are materially responsible for
management of the Corporation and its subsidiaries. No
member of the Board of Directors who is not also a full-time
employee of the Corporation is eligible for stock options
under the plans.
The price per share for the common stock upon the exercise
of each option ("Option Price") is set by the Plan Committee
but shall not be less than market value on the date of
grant. Each option is exercisable in such manner and in
such periods (not exceeding ten (10) years) as are
determined by the Plan Committee, upon payment in full of
the Option Price in cash, or in shares of the Corporation's
common stock valued at current market value. Options are
not exercisable during the first two (2) years after the
date of the grant thereof. Thereafter, options may be
exercised on or after the anniversary date of the grant in
three equal installments so that the full grant may be
exercised no sooner than four years after the date of the
grant. In the case of a takeover or merger of the
Corporation, all option rights granted and pending, but
deferred by the time limits set forth in the Plans may, at
the discreation of the Planning Committee, be accelerated,
and may be exercised without delay to the extent permissible
under Section 422A of the Code. An employee's incentive
stock option can only become exercisable during a calendar
year to the extent the aggregate fair market value
(determined as of the date of the grant) of all shares with
respect to which all incentive stock options of that
employee are exercisable for the first time during that year
does not exceed $100,000.
In 1993, the Committee determined to grant stock options
to executive officers noting that such grants afford a
desirable long-term compensation method because they closely
align the interest of management with shareholder value.
In fixing the grants of stock options to the individual
executive officers, other than the Chief Executive Officer,
the Plan Committee reviewed with the Chief Executive Officer
the recommended individual awards, taking into account the
respective scope of accountability, strategic and
operational goals, and anticipated performance requirements
and contributions of each of the executive officers. The
award to the Chief Executive Officer was fixed separately
and was based, among other things, on a review of
competitive compensation data from several surveys, data
from selected peer companies, information regarding his
total compensation and historical information regarding his
long-term compensation awards as well as the Committee's
perception of his past and expected future contributions to
the Corporation's achievement of its long-term performance
goals.
The above compensation report has been submitted by the
Corporation's Board of Directors.
Irving P. Bright John Burman Patrick J. Cvengros
William H. Dyer Louis A. Haas F. Donald Higdon
M. Leon Johnson William J. Jones Louis M. Michelson
Louis D. Myre, MD David M. Paxton Robert R. Petter
Joseph A. Powell Allan R. Rhodes William A. Usher
SHAREOWNER RETURN PERFORMANCE PRESENTATION
Set forth is comparative information concerning the change
in the cumulative total shareowner return on the
Corporation's Common Stock against the cumulative total
return of the Media General Financial Industry Group 045 of
East South Central Banks and the Broad NASDAQ Market Index
for the period of five fiscal years commencing December 31,
1988 and ending December 31, 1993.
Comparison of Five Year Cumulative Total Return of Company,
Peer Group and Broad Market
1988 1989 1990 1991 1992 1993
CBT Corporation 100 121.78 109.97 127.19 211.70 307.04
Peer Group 100 98.60 91.13 175.81 263.44 209.41
Broad Market 100 112.61 100.42 132.72 149.04 253.73
Assumes that the value of the investment in CBT Corporation
Common Stock and each index was $100 on December 31, 1988
and that all dividends were re-invested.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Bank provides a Salary Continuance Agreement for Mr.
Cvengros. This Agreement provides that upon his retirement,
death or termination of employment or a takeover or merger
of the Corporation, Mr. Cvengros, or his estate or
designated beneficiary, will receive a yearly income of
$100,000 for a period of ten years. The Bank also maintains
a non-qualified Deferred Compensation Plan for Mr. Cvengros
under which he, or his estate or designated beneficiary,
will receive annual distributions for a period of three
years. Payments under both of these agreements became
effective upon Mr. Cvengros' retirement from the Bank in
January, 1992.
The CBT Corporation 1986 Stock Option Plan contains a
change in control provision. Under the Plan, in the case of
a takeover or merger of the Corporation, all option rights
granted and pending, but deferred by the time limits imposed
by the plan, shall be accelerated and may be exercised
without delay to the extent permissible under Section 422A
of the Internal Revenue Code.
The CBT Corporation 1993 Stock Option Plan contains a
similar change-in-control provision. Upon a change-in-
control of the Corporation, as defined in the Plan, all
outstanding stock options shall be accelerated and may be
immediately exercised. In addition, the Plan provides that
if there is a change in control of the Corporation the
common stock or other comparable securities of an acquiring
entity shall be substituted for the Common Stock of the
Corporation.
TRANSACTIONS WITH MANAGEMENT
The officers and directors of the Corporation are at
present, as in the past, customers of the Bank and have had
and expect to have transactions with such in the ordinary
course of business. In addition, some of the officers and
directors of the Corporation are at present, as in the past,
also officers, directors or principal stockholders of
corporations which are customers of the Bank and which had
and expect to have transactions with the Bank in the
ordinary course of business. All such transactions were
made in the ordinary course of business, were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions, with other persons and did not involve more
than normal risk of collectibility or present other
unfavorable or unusual features.
STOCKHOLDER'S PROPOSALS FOR 1994 ANNUAL MEETING
Proposals by stockholders to be presented at the 1995
Annual Meeting of stockholders must be received by the
President of the Corporation at its principal office no
later than November 22, 1994, for inclusion in the proxy
statement and form of proxy relating to that meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
For the fiscal year ending December 31, 1993, the
accounting firm of Deloitte & Touche served as the
Corporation's independent public accountants and auditors.
The Board of Directors anticipates that the accounting firm
of Deloitte & Touche will serve as the independent public
accountants and auditors of the Corporation for the fiscal
year ending December 31, 1994, although such firm has not
been formally selected. A representative from the firm of
Deloitte & Touche is expected to be present at the Annual
Meeting and will be available to make a statement should he
desire to do so, and respond to questions of the
stockholders.
ANNUAL REPORT
Upon written request, the Corporation will provide without
charge to each stockholder, a copy of the Corporation's
Annual Report on Form 10-K which is required to be filed
with the Securities and Exchange Commission for the year
ended December 31, 1993. Address all requests to:
Mr. William J. Jones, President and
Chief Executive Officer
CBT Corporation
P. O. Box 2400
Paducah, Kentucky 42002-2400
OTHER MATTERS
The Board of Directors of the Corporation does not know of
any matters for action by stockholders at the Annual Meeting
other than the matters described in the notice. However,
the enclosed Proxy will confer discretionary authority with
respect to any other matters which may properly come before
the meeting.
It is important that proxies be returned promptly.
Stockholders, whether or not they expect to attend in
person, are requested to return their Proxies in order that
a quorum may be assured. Return may be made in the enclosed
envelope, to which no postage need be affixed.
By Order of the Board of Directors
William J. Jones
President and Chief Executive Officer
Paducah, Kentucky
March 8, 1994